Editorial Analysis for Civil Services - Crashing Crypto Market

Crashing Crypto Market


  • Bitcoin has lost more than two-thirds of its value while Ethereum has lost almost 80% from its peak. As a result, the overall market capitalisation of cryptocurrencies has dropped under $1 trillion for the first time since January 2021.

Why this fall in prices?

  • In order to fight inflation, The US Federal Reserve has tighten the monetary policy due to which there is fall in prices of stocks.
  • According to some analysts fall in prices of stocks also have led to crash of the crypto currencies market.
  • As central banks withdraw liquidity from the market, there’s less money chasing assets, which in turn causes the prices of assets to drop.


What is the Government’s view?

  • Some sceptics have also stated that, while private cryptocurrencies may eventually become viable alternatives to fiat currencies, governments and central banks may refuse to allow this.
  • Many countries have taken steps to hinder broad adoption of cryptocurrencies.
  • While some governments, such as China and Russia, have openly banned cryptocurrencies, others, like as India, have attempted to aggressively tax and regulate them.
  • While the government of India has not issued a blanket ban on cryptocurrencies, the Reserve Bank of India has been vociferous about the need to do so.
What will be the future of cryptos?
  • Cryptocurrency supporters believe that cryptocurrencies like Bitcoin have always been prone to wild price swings, and that now is a great moment to buy these virtual currencies at a discount.
  • To be honest, many crypto-enthusiasts have profited handsomely in the past when they purchased cryptocurrencies during panic selling periods.
  • They suggest that, similar to gold, cryptocurrencies shield investors from price inflation.
  • It’s worth noting that, unlike central bank-issued fiat currencies, the quantity of various cryptocurrencies is limited by design.
  • Investors can protect themselves from central bank debasement by storing their wealth in cryptocurrencies that preserve or even increase in value over time.


           Source The Hindu

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